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Top Posts – Homeownership Rates of Family Households

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With the end of 2024 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In September, Catherine Koh dived into data on the homeownership rate of various household types including married couples with children, married couples with no children, single parents, and others.

The homeownership rate for multigenerational households increased by 4.9 percentage points (pp) over the last decade, but there’s another household type that experienced an even larger increase in the homeownership rate over the same period—single parent households.

In further analysis of the Census’s American Community Survey (ACS) data, NAHB dives deeper into the homeownership rate for other family household types: married couples with no children, married couples with children and single parent households. In 2022, most family households were married with no children (44%), followed by married with children (26%), single parents (12%), others (12%), and multigenerational families (6%). This composition has not changed much, with the exception of a gradual decrease in the share of married with children and single parent households, which is offset by an increase in the share of married with no children households.

The homeownership rate for single parent households saw the largest gains in homeownership rate with an increase of 5.7 percentage points over the decade. However, the overall level of homeownership rate for single parent households remains the lowest among all other family household types at just 41%.    Another group that saw a large increase was the married couple with children households, with a 4.5% increase over the decade from 73% to 78%. Like multigenerational households, these increases were spurred on by historically low mortgage rates in 2021.

The only household type to have plateaued was married without children. As a matter of fact, these households saw decreasing homeownership rates for a few years before creeping back up to be at roughly the same rate as they were ten years ago at 84%. Nonetheless, married without children households remain as the group with the highest homeownership rate with an average rate of 84% over the decade.

We also examined the estimated home price-to-income ratio (HPI) for various household types. To calculate the home prices for recent homebuyers we used the median property value for owners who moved into their property within the past year. Here is where we see the effect of how multigenerational households were able to lower their HPI with pooled income and budgets. In contrast are single parent households with their estimated home prices approaching five times their income, indicating that these households are significantly burdened by housing costs.   

Given that homeownership rates jumped in recent years for most household types despite increases in home prices suggests that the low mortgage rates in 2021 made steep home prices more palatable for homebuyers to enter the market. However, it is unlikely that we’ll see a continued increase in homeownership while mortgage rates remain elevated. 

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Mortgage Activity Declines in November as Rates Continue to Increase

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The Market Composite Index, a measure of mortgage loan application volume by the Mortgage Bankers Association’s (MBA) weekly survey, decreased 14.5%, month-over-month, in November on a seasonally adjusted (SA) basis. The slowdown in mortgage activity can be attributed to higher mortgage rates as the ten-year Treasury yield increased in November, reflecting uncertainties surrounding the elections.

The market decline was reflected primarily in the Refinance Index (SA), which decreased by 33.2% month-over-month. Meanwhile, the Purchase Index (SA) showed a modest increase of 2.7% over the same period. However, compared to October 2023, the Market Composite Index is up by 16.4%, with the Purchase Index seeing a slight 4.8% increase and the Refinance Index higher by 45.9%.

The average contract rate for 30-year fixed mortgage rate per the MBA survey for November averaged at 6.8%, 29 basis points (bps) higher month-over-month in response to a higher ten-year Treasury rate.

Loan size metrics also reflected market adjustments. The average loan size for the total market (including purchases and refinances) shrank 2.9% month-over-month on a non-seasonally adjusted (NSA) basis, decreasing from $389,800 to $378,400. Loan sizes for purchasing and refinancing decreased. Purchase loans averaged $436,200, down 2.7% from $448,300, while refinance loans saw a sharper 9.9% decrease, with the average loan size falling from $322,500 to $290,600. Adjustable-rate mortgages (ARMs) also declined 6.0%, from $1.15 million to $1.08 million.

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Credit Still Tight, But Builders Finally Get Some Relief from Interest Rates

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In the third quarter of 2024, borrowers and lenders agreed, as they have over most of the past three years, that credit for residential Land Acquisition, Development & Construction (AD&C) tightened. On the borrower’s side, the net easing index from NAHB’s survey on AD&C Financing posted a reading of -12.0 (the negative number indicates credit was tighter than in the previous quarter). On the lender’s side, the comparable net easing index based on the Federal Reserve’s survey of senior loan officers posted a similar reading of -14.8.  Although the additional net tightening was relatively mild in the third quarter (as indicated by negative numbers that were smaller, in absolute terms, than they had been at any time since 2022 Q1), both surveys indicate that credit has tightened for eleven consecutive quarters—so credit for AD&C must now be significantly tighter than it was in 2021.   

According to  NAHB’s survey, the most common ways in which lenders tightened in the third quarter were by lowering the loan-to-value (or loan-to-cost) ratio, and requiring personal guarantees or collateral not related to the project—each reported by 61% of builders and developers. After those two, reducing the amount lenders are willing to lend was in the third place, with 56%.

Additional information from the Fed’s survey of lenders—including measures of demand and net easing for residential mortgages—is discussed in an earlier post.

Although the availability of credit for residential AD&C was tighter in the third quarter, builders and developers finally got some relief from the elevated cost of credit that has prevailed recently. In the third quarter, the contract interest rate decreased on all four categories of AD&C loans tracked in the NAHB survey. The average rate declined from 9.28% in 2024 Q2 to 8.50% on loans for land acquisition, from 9.05% to 8.83% on loans for land development, from 8.98% to 8.54% on loans for speculative single-family construction, and from 8.55% to 8.11% on loans for pre-sold single-family construction.

More detail on credit conditions for builders and developers is available on NAHB’s AD&C Financing Survey web page.

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Mortgage Rates Rise in November Amid Post-Election Market Volatility

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Mortgage rates climbed in November, driven by market volatility and a surge in Treasury yields following the recent elections. On the day after the election results, the 10-year Treasury yield spiked by 14 basis points (bps), setting the stage for further rate increases throughout the month.

According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage increased 38 basis points from October, reaching 6.81%. Meanwhile, the 15-year fixed-rate mortgage saw an even steeper increase of 43 bps to land at 6.03%.

The 10-year Treasury yield, a key benchmark for mortgage rates, averaged 4.37% in November—38 bps higher than October’s average. This increase reflected heightened market uncertainty and persistent volatility. Looking ahead, the Federal Reserve is set to meet on December 17-18 to evaluate the possibility of another rate cut. Since the federal funds rate influences interest rates, a rate cut could potentially ease long-term mortgage rates, but this decision will hinge on the latest employment and inflation data, and other macroeconomic factors that could have an upward pressure on inflation including larger government deficits and higher tariffs. NAHB forecasts additional declines to the federal funds rate into a range below 4%.

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Apartment Completions Rise Resulting in Slower Absorption Rates

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The percentage of new apartment units that were absorbed within three months of completion rose from 50% to 55% in the second quarter of 2024, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA). The survey covers new units in multifamily residential buildings with five or more units. Meanwhile, the absorption rate within three months for condominiums and cooperative units fell over the quarter, from 80% to 66%.

Apartments

The percentage of apartments absorbed within three months has fallen significantly from its peak of 75% in the third quarter of 2021, as shown in the graph above. Currently, the rate stands at 55% which is coupled with an uptick in completions, as the SOMA estimates show a new high of completions at 118,600 units in the second quarter of 2024. This is well above the level of completions a year ago, which stood at 83,140. The pace of multifamily units being completed has picked up, as many units under construction over the past year are reaching the market. Since the first quarter of 2022, completions have been above 75,000 for nine consecutive quarters, as seen in the graph below.  The level of completions has also risen for the past three quarters.

Along with the three-month absorption rate and completions, SOMA reports absorption rates within six-months, nine-months, and 12-months of completion. The absorption rates for all time periods follow similar downward trends as the number of apartments completed has ticked upwards over the past two years. For apartments completed in the 1st quarter of 2024, the absorption rate within six months of completion was 75%, down from a peak of 88% in the third quarter of 2021 but up from 69% the previous quarter.

For the nine-month period, the absorption rate of apartments completed in the fourth quarter of 2023 fell to 83% down for the third consecutive quarter. This rate also peaked at 96% in the same quarter as the other periods, the third quarter of 2021.

Finally, apartment units completed in the third quarter of 2023 were 93% absorbed within a year following completion. The trend remains the same for the 12-month period as the other time periods, as it peaked in the third quarter of 2021 at 98%.

Condominiums and Cooperative Units

The absorption rate for new condominiums and cooperative units fell to 66% for the quarter. The previous quarter’s rate was significantly revised, up from 69% to 80%, which helps to explain the dramatic decline.

Total completions of new condominiums and cooperative units, according to the SOMA, rose over the quarter up from 2,829 to 4,366. Quarterly completions of these units peaked in the second quarter of 2018, at 7,996 completions but have steadily fallen since that peak.

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October New Home Sales Down on Higher Rates

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Steadily rising mortgage rates coupled with ongoing affordability challenges kept many potential home buyers on the sidelines in October. Sales of newly built, single-family homes in October declined 17.3% to a 610,000 seasonally adjusted annual rate, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in October is down 9.4% compared to a year earlier. October new home sales are up 2.1% on a year-to-date basis.

A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the October reading of 610,000 units is the number of homes that would sell if this pace continued for the next 12 months.

New single-family home inventory in October remained elevated at a level of 481,000, up 8.8% compared to a year earlier. This represents a 9.5 months’ supply at the current sales pace. A measure near a six months’ supply is considered balanced.

While a 9.5 months’ supply may be considered elevated in normal market conditions, there is currently only a 4.2 months’ supply of existing single-family homes on the market. Combined, new and existing total months’ supply remains below historic norms at approximately 4.9 months, although this measure is expected to increase as more home sellers test the market in the months ahead.

A year ago, there were 76,000 completed, ready-to-occupy homes available for sale (not seasonally adjusted). By the end of October 2024, that number increased 52.6% to 116,000. However, completed, ready-to-occupy inventory remains just 24% of total inventory, while homes under construction account for 55% of the inventory. The remaining 22% of new homes sold in October were homes that had not started construction when the sales contract was signed.

The median new home sale price in October edged up 2.5% to $437,300 and is up 4.7% from a year ago. In terms of affordability, the share of entry-level homes priced below $300,000 has been steadily falling in recent years. Only 13% of the homes were priced in this entry-level affordable range, while 37% of the homes were priced above $500,000. Most of the homes were priced between $300,000-$500,000.

Regionally, on a year-over-year basis, new home sales are up 35.3% in the Northeast and 15.9% in the Midwest. New home sales are down 19.7% in the South and 1.3% in the West.

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Higher Mortgage Interest Rates Slow Housing Production in October

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Housing starts edged lower last month as average monthly mortgage rates increased a quarter-point from 6.18% to 6.43% between September and October, according to Freddie Mac.

Overall housing starts decreased 3.1% in October to a seasonally adjusted annual rate of 1.31 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The October reading of 1.31 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 6.9% to a 970,000 seasonally adjusted annual rate. On a year-to-date basis, single-family construction is up 9.3%. The volatile multifamily sector, which includes apartment buildings and condos, increased 9.6% to an annualized 341,000 pace but are down 29.3% on a year-to-date basis.

Although housing starts declined in October, builder sentiment improved for a third straight month in November as builders anticipate an improved regulatory environment in 2025 that will allow the industry to increase housing supply. Further interest rate cuts from the Federal Reserve through 2025 should result in lower interest rates for construction and development loans, helping to lead to a stabilization for apartment construction and expansion for single-family home building.

While multifamily starts increased in October, the number of apartments under construction is down to 821,000, the lowest count since March 2022 and down 18.9% from a year ago. In October, there were 1.8 apartments that completed construction for every one apartment that started construction. The three-month moving average reached a ratio of 2 in October.

There were 644,000 single-family homes under construction in October, down 3.6% from a year ago and down 22% from the peak count in the Spring of 2022.

On a regional and year-to-date basis, combined single-family and multifamily starts are 10.4% higher in the Northeast, 1.7% lower in the Midwest, 5.0% lower in the South due to hurricane effects, and 4.4% lower in the West.

Overall permits decreased 0.6% to a 1.42 million unit annualized rate in October. Single-family permits increased 0.5% to a 968,000 unit rate and are up 9.4% on a year-to-date basis. Multifamily permits decreased 3.0% to an annualized 448,000 pace.

Looking at regional data on a year-to-date basis, permits are 0.9% higher in the Northeast, 3.9% higher in the Midwest, 2.4% lower in the South and 4.8% lower in the West.

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Mortgage Rates Reversed Downwards Trend in October

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In October, mortgage rates reversed their recent downward trajectory, returning to levels two months earlier. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage increased 25 basis points (bps) from September to 6.18%. The 15-year fixed-rate mortgage saw an even steeper increase of 34 bps to land at 5.60%.

These increases coincided with heightened volatility in the 10-year Treasury yield, which jumped 38 bps over the month, moving from 3.72% in September to 4.10%. This spike followed a weaker-than-expected labor report driven by the disruptions from two hurricanes, as well as the Boeing strike, and the 2024 election.

However, the largest part of the increase for interest rates is due to growing, post-election concerns over budget deficits. NAHB will be revising its interest rate outlook as the final election results are determined and the fiscal policy position comes into focus. Nonetheless, long-term interest rates have increased since September due to election developments.

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Mortgage Activity Declines in October as Mortgage Rates Increase

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The Market Composite Index, a measure of mortgage loan application volume by the Mortgage Bankers Association’s (MBA) weekly survey, decreased 13.9% month-over-month on a seasonally adjusted (SA) basis due to higher mortgage rates. This decline was reflected in both the Purchase and Refinance Indices, which fell by 4.4% and 23%, respectively. However, compared to October 2023, the Market Composite Index is up by 39%, with the Purchase Index seeing a slight 1.9% increase and the Refinance Index higher by 149.9%.

The average 30-year fixed mortgage rate reversed its downward trajectory with an increase of 36 basis points (bps), following volatility in the ten-year Treasury yield. This brought the rate back to around the same level as it was in August at 6.53%. However, compared to its peak last October, the current rate is 125 bps lower.

The average loan size for the total market (including purchases and refinances) was $390,225 on a non-seasonally adjusted (NSA) basis, a decrease of 2.6% from September. Purchase loans grew by 2.1% to an average of $448,675, while refinance loans declined by 11.3% to $323,750. Adjustable-rate mortgages (ARMs) saw a modest decrease of 3.4% in average loan size from $1.19 million to $1.15 million.

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Homeownership Rates for Young Adults

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With housing affordability at a multidecade low, housing costs have become a major issue in the 2024 presidential election. While NAHB reports the national homeownership rate from the Census Bureau’s Housing Vacancy Survey on a quarterly basis, examining characteristics across congressional districts provides valuable insights.

A recent NAHB analysis of 2023 American Community Survey shows about two-thirds (65.2%) of US households are homeowners, yet there are forty congressional districts where renters represent the majority. Another NAHB post found that in the second quarter of this year the homeownership rate for households under the age of 35 has dropped to its lowest level in four years, as higher mortgage rates and low inventory have made affordability a bigger challenge for first-time buyers. As the largest cohort of millennials reach peak homebuying years, it is important to take a closer look at homeownership rate for those under age 35. This post will focus on comparing the homeownership rates of young adults (under 35) across congressional districts using 2023 ACS data.

The map below illustrates variation in young adults’ homeownership rates across congressional districts, ranging from 5.2% to 65.6%. In general, young adults’ homeownership rates tend to follow a distinct pattern with respect to the overall homeownership rate, particularly in the top five districts with the highest homeownership rates and the bottom five with the lowest.

Table 1 shows that the top five districts with the highest young adults’ homeownership rate also have overall homeownership rate above 80%. However, the share of young adults in the top two districts is relatively low. In New York’s 1st and 4th district, 65% of young adults are homeowners, but they only make up only 8.9% and 9.8% of the overall population. Following that, Michigan’s 9th and 2nd districts have the third and fourth highest young adults’ homeownership rates above 60%.

Table 1Congressional DistrictYoung Adults Homeownership RateOverall Homeownership RateYoung Adults Share of PopulationNew York, District 165.6%83.8%8.9%New York, District 465.2%80.7%9.8%Michigan, District 965.2%84.9%14.1%Michigan, District 261.0%82.4%17.3%Maryland, District 559.3%81.7%13.2%

Table 2 shows the bottom five districts with the lowest young adult homeownership rates. Like the top five districts, those with the lowest young adult homeownership rates also tend to have lower overall homeownership rates. Among the bottom 15 districts, most are in New York and California, with only the 15th lowest in Washington, D.C. The West coast, in general, tends to have lower homeownership rates.

Table 2Congressional DistrictYoung Adults Homeownership RateOverall Homeownership RateYoung Adults Share of PopulationNew York, District 135.2%12.8%20.4%California, District 347.5%22.0%24.8%New York, District 157.9%15.9%18.3%New York, District 78.2%22.0%33.0%California, District 308.7%30.1%24.4%

Among fifty States and the District of Columbia, New York has congressional districts with both the highest and lowest homeownership rates. This mirrors the findings of overall homeownership rate in our previous post. The highest young adults’ homeownership rate is in New York’s 1st district, while the lowest is in New York’s 13th district.

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